Pessimism among Australian growers, stoked by unsettling dryness heading into winter, has reversed, with many turned "wildly bullish" by higher grain prices, and enjoying improved rains too.

The revival in Australian grain prices - which reached Aus$291 a tonne in Sydney this week for January delivery, up more than 20% over the last month - is "offering growers an unprecedented chance to take advantage of some very healthy margins this year", National Australia Bank said.

Prices, which on a swap basis had reached Aus$280-330 a tonne, "can have an excellent return on investment", the bank added, noting "wildly bullish" sentiment among "farmers across the country".

Indeed, many growers have already cashed in on the higher prices, with Rabobank noting that the rally had already "created significant interest in mid-year marketing opportunities".

'Biggest July rain in decades'

Rabobank's comments came as it downgraded, by 1.5m tonnes to 24.5m tonnes, its forecast for this year's Australian wheat crop, following dry weather in many areas in, particularly, May.

Nonetheless, the forecast was higher than that of many other commentators, including the official Abares commodities bureau, which last month pegged the wheat harvest at 24.1m tonnes.

Rabobank estimated Australian wheat exports in 2012-13 at 21.0m tonnes, 500,000 tonnes above the Abares forecast.

Indeed, the country has received "widespread rainfall across [its] key grain growing regions", Luke Mathews, at Commonwealth Bank of Australia, said, flagging forecasts of more to come.

Weatherzone meteorologists have estimated that current rains should bring at least 25mm-50mm across the Murray Darling Basin, with precipitation of 10mm-20mm already recorded across many drier areas of New South Wales and Victoria.

"[This] may turn out to be the biggest July rain in decades, giving many farmers what they need to get winter crops thriving after a fairly dry start to the season," Weatherzone said.

'Risk of a dry finish'

Separately, farm officials in South Australia said that June rains had come in time to boost wheat sowings, albeit with much planted two weeks or more beyond the ideal seeding window.

"The reduction in the area sown to wheat across the state was not as great as anticipated prior to sowing," they said, estimating plantings at 2.18m hectares, and the harvest at 3.6m tonnes.

And while the emergence of an El Nino weather pattern, which tends to bring dryness to much of Australia, has been ringing alarm bells, Rabobank downplayed the threat for 2012-13.

"The forecast likelihood of El Nino emerging… is strengthening, which may increase the risk of a dry finish to the 2012 crop year," the bank said.

"However, given the favourable sub-soil moisture levels in most regions, we do not expect a major crop failure this season."